Published: Sunday, February 3, 2013 at 5:30 a.m.

Last Modified: Sunday, February 3, 2013 at 9:33 p.m.

The fiscal cliff deal averted a major fiscal calamity for the nation.

But it wasn't necessarily good news for local hospitals, which collectively will see as much as $11 million less in government payments over the next 10 years as a result of the compromise, according to an analysis by the Florida Hospital Association.

Though the latest cuts only affect a small portion of revenue, hospitals in Florida are facing billions in Medicare reductions under the Affordable Care Act and Medicaid payment reductions from state lawmakers.

John Johnson, chairman of the Halifax Health Board of Commissioners, said he is concerned the reductions could take a toll on the community's health.

"We are going to have an increasing number of physicians who simply refuse to take Medicare patients," he said during this month's hospital board meeting.

Others argue reducing government payments to hospitals could be a positive for consumers and for the nation's economic future because it will spur providers to become more efficient and eliminate waste.

Health care spending in the United States is unsustainable, and cuts must be made, said Aaron Liberman, a professor of health management at University of Central Florida's College of Health and Public Affairs.

"It is a necessary occurrence," Liberman said. "If we don't find ways to rein in our costs, health care is the one part of our economy that can quite literally bankrupt the United States."

Hospitals agreed to cuts in the health care law with the expectation they would receive more revenue by seeing more insured patients. In Florida, though, it's unclear whether the state will agree to expand Medicaid — a key way of insuring more people.

The Florida Hospital Association anticipates its members will see $10.7 billion less in Medicare payments over the next 10 years under health care reform. Since 2005, Florida hospitals have taken about $1.6 billion in cuts to the Medicaid program, according to the association.

The industry is worried about what could happen next because Congress postponed an automatic spending cut — known as sequestration — that would reduce Medicare payments by 2 percent for all medical providers. The reduction is now expected to happen March 1.

The cumulative effect of these cuts is putting a strain on hospital budgets across the state, said Bruce Rueben, CEO of the Florida Hospital Association.

"Hospitals have already contributed in a substantive and long-term way to the budget deficit challenge," said Rueben, whose group advocates for Florida's hospitals in both Tallahassee and Washington. "It's time to look somewhere else."

As a result of the fiscal cliff deal, Halifax Health will lose $5.9 million over the next 10 years, and Bert Fish Medical Center will see $1.3 million less.

The affect could actually be greater than the Florida Hospital Association projections, because many hospitals operate Medicare health management organizations that weren't factored into the analysis, said Eric Peburn, chief financial officer at Halifax Health. He's projecting the effect could be as much as $2.5 million a year at his hospital when factoring in the Medicare HMO.

The cumulative effect of the funding reductions will force hospitals across the country to take a close look at their books, Peburn said.

"All options have to be evaluated," he said. "We are looking at revenue opportunities as well as efficiency opportunities."

Florida Hospital saw some upside. Florida Hospital Flagler will receive a net benefit of $5.4 million because of an extension of a program that helps rural hospitals. Overall, the hospital chain's five medical centers in Volusia and Flagler are expecting to lose $3.7 million over the next 10 years when lumped together.

Statewide, the Florida Hospital Association is expecting hospitals to take a $698.6 million hit over the next 10 years as a result of the fiscal cliff deal. Nationally, the American Hospital Association has tagged the number at $15 billion.

Florida Hospital is focusing on becoming more efficient as opposed to eliminating services, said Daryl Tol, a regional CEO who oversees Florida Hospital's operations in Volusia and Flagler. Even small reductions can affect hospitals, though, because they typically operate on low margins, he said.

"It adds up — no question," Tol said.

Effect of fiscal cliff deal on local hospitals over 10 years

The fiscal cliff deal mostly delivered funding reductions to hospitals. A few medical centers, however, will see a positive effect because Congress extended a program that helps rural hospitals.

<p>The fiscal cliff deal averted a major fiscal calamity for the nation. </p><p>But it wasn't necessarily good news for local hospitals, which collectively will see as much as $11 million less in government payments over the next 10 years as a result of the compromise, according to an analysis by the Florida Hospital Association. </p><p>Though the latest cuts only affect a small portion of revenue, hospitals in Florida are facing billions in Medicare reductions under the Affordable Care Act and Medicaid payment reductions from state lawmakers. </p><p>John Johnson, chairman of the Halifax Health Board of Commissioners, said he is concerned the reductions could take a toll on the community's health. </p><p>"We are going to have an increasing number of physicians who simply refuse to take Medicare patients," he said during this month's hospital board meeting. </p><p>Others argue reducing government payments to hospitals could be a positive for consumers and for the nation's economic future because it will spur providers to become more efficient and eliminate waste. </p><p>Health care spending in the United States is unsustainable, and cuts must be made, said Aaron Liberman, a professor of health management at University of Central Florida's College of Health and Public Affairs. </p><p>"It is a necessary occurrence," Liberman said. "If we don't find ways to rein in our costs, health care is the one part of our economy that can quite literally bankrupt the United States." </p><p>Hospitals agreed to cuts in the health care law with the expectation they would receive more revenue by seeing more insured patients. In Florida, though, it's unclear whether the state will agree to expand Medicaid &mdash; a key way of insuring more people. </p><p>The Florida Hospital Association anticipates its members will see $10.7 billion less in Medicare payments over the next 10 years under health care reform. Since 2005, Florida hospitals have taken about $1.6 billion in cuts to the Medicaid program, according to the association. </p><p>The industry is worried about what could happen next because Congress postponed an automatic spending cut &mdash; known as sequestration &mdash; that would reduce Medicare payments by 2 percent for all medical providers. The reduction is now expected to happen March 1. </p><p>The cumulative effect of these cuts is putting a strain on hospital budgets across the state, said Bruce Rueben, CEO of the Florida Hospital Association. </p><p>"Hospitals have already contributed in a substantive and long-term way to the budget deficit challenge," said Rueben, whose group advocates for Florida's hospitals in both Tallahassee and Washington. "It's time to look somewhere else." </p><p>As a result of the fiscal cliff deal, Halifax Health will lose $5.9 million over the next 10 years, and Bert Fish Medical Center will see $1.3 million less. </p><p>The affect could actually be greater than the Florida Hospital Association projections, because many hospitals operate Medicare health management organizations that weren't factored into the analysis, said Eric Peburn, chief financial officer at Halifax Health. He's projecting the effect could be as much as $2.5 million a year at his hospital when factoring in the Medicare HMO. </p><p>The cumulative effect of the funding reductions will force hospitals across the country to take a close look at their books, Peburn said. </p><p>"All options have to be evaluated," he said. "We are looking at revenue opportunities as well as efficiency opportunities." </p><p>Florida Hospital saw some upside. Florida Hospital Flagler will receive a net benefit of $5.4 million because of an extension of a program that helps rural hospitals. Overall, the hospital chain's five medical centers in Volusia and Flagler are expecting to lose $3.7 million over the next 10 years when lumped together. </p><p>Statewide, the Florida Hospital Association is expecting hospitals to take a $698.6 million hit over the next 10 years as a result of the fiscal cliff deal. Nationally, the American Hospital Association has tagged the number at $15 billion. </p><p>Florida Hospital is focusing on becoming more efficient as opposed to eliminating services, said Daryl Tol, a regional CEO who oversees Florida Hospital's operations in Volusia and Flagler. Even small reductions can affect hospitals, though, because they typically operate on low margins, he said. </p><p>"It adds up &mdash; no question," Tol said.</p><p></p><p> </p><p>Effect of fiscal cliff deal on local hospitals over 10 years </p><p>The fiscal cliff deal mostly delivered funding reductions to hospitals. A few medical centers, however, will see a positive effect because Congress extended a program that helps rural hospitals.</p><p>Bert Fish Medical Center: - $1.3 million</p><p>Florida Hospital DeLand: -$2 million</p><p>Florida Hospital Fish Memorial: -$2.5 million</p><p>Florida Hospital Flagler: +$5.4 million</p><p>Florida Hospital Memorial Medical Center and Oceanside: -$4.6 million</p><p>Halifax Health Medical Center: -$5.9 million</p><p>Total impact: -$10.9 million</p><p>SOURCE: Florida Hospital Association</p>